BRADENTON, Fla., Dec. 7. 2009 - Support for an accord on climate change in Copenhagen has come from a surprising place: Germany's mammoth re-insurer, Munich Re, which says huge losses due to climate change demand that "fundamental framework conditions should be established" iat the Copenhagen Climate Change Summit, whicxh opened today. "We cannot afford a delay at the expense of future generations," the company said in an official statement.

The company says worldwide losses since 1980, when it began assessing the damage, have jumped three times since then and cost $465 billion just in the past eigtht years. Figured at the "original value," rather than current replacement value, the losses since 1980 have topped $1.6 trillion. Insured losses since 2000 have cost $260 billion, Munich Re officials in Germany said.

People are invited to touch The Melting Bear project in downtown Copenhagen, which thematically connects them to climate change. The display is at the Dec. 7-18 global climate change summit conference. AR File Photo

"Climate change is one of the biggest challenges facing mankind. It claims many lives. And it also costs a great deal, given the rising trend in weather-related natural catastrophes and resulting losses," said a member of the firm's board of management responsible for reinsurance, Torsten Jeworrek.

The climate change summit conference is taking place in Copenhagen, Denmark, from today to Dec. 18. President Barack Obama is scheduled to address the summit on its closing day.

While a number of factors are involved, Jeworrek said, "there is clear evidence indicating that one cause is climate change. Climate protection is necessary and makes economic sense. It is therefore very important for the Copenhagen climate summit to achieve significant progress and, as far as possible, lay the cornerstones of a strict climate agreement."

The company carefully backed away from laying all the losses on the doorstep of climate change, however.

"Munich Re's NatCatSERVICE database shows that, globally, the average number of major weather-related catastrophes such as windstorms, floods or droughts is now three times as high as at the beginning of the 1980s. Losses have risen even more, with average increases of 11% per year since 1980.

"To what extent the increased losses are due to climate change is not yet clear," Jeworrek said. "Preliminary analyses suggest that it accounts for a low single-digit percentage of annual overall losses," a munich Re executive said.

Several nations that are leading greenhouse gas producers, including the United States and Japan, have agreed that a delay is needed, while countries once resistant to such an accord, including China and India, have embraced the global warming doctrine and agreed to voluntary reductions of their greenhouse gas emissions.

For Munich Re and other insurers, delay on emissions regulations can be very expensive.

"Our statistics clearly show that the loss burden from weather-related natural catastrophes is increasing. A year like 2009, with relatively low losses to date, in no way contradicts this", said Jeworrek. "Something must be done. Even if an all-embracing agreement does not seem feasible in Copenhagen, at the very least fundamental framework conditions should be established. We cannot afford a delay at the expense of future generations."

"The company says weather-related losses have increased three times over those in the 1980's and have produced enormous losses. "Munich Re's NatCatSERVICE database shows that, globally, the average number of major weather-related catastrophes such as windstorms, floods or droughts is now three times as high as at the beginning of the 1980s," averaging 11 percent more each year.

It may not seem like a large increase, but in terms of cost "the amounts involved are enormous," Jeworrek said.

"This is illustrated by total natural catastrophes losses in the period 1980-2008. According to studies by Munich Re, overall losses due to weather-related events came to around $1.6 trillion in original values, with insured losses amounting to approximately $465 billion. In the period from 2000-2008 alone, overall losses totaled over $750 billion," he said, while insured losses came to around $280 billion.

One casualty of these increased losses in Florida, for example, has been affordable insurance rates. State Farm Florida, which as of August 2009, has written at least one million policies against flood and wind damage for homes and businesses in Florida, has repeatedly threatened to drop all its homeowner policies in the state when a statewide 67 percent rate increase was rejected by the state's insurance commissioner, who had already rejected State Farm's request for a 47 percent increase in January 2009. The company said it would get part of its increase if the state will let State Farm end special discounts for 246,000 Florida homeowners who have upgraded storm-damage protection for their property, it told state officials. Much of its rate angst is driven by the threat of climate change-induced future hurricanes, droughts and floods.

Other insurers have also made claims for large increases, and residents who almost universally oppose the rate hikes say that in the current recessionary climate, the proposed rates might cause them to be unable to make mortgage payments and thus lose their homes. The rates also have a powerful impact on counties, cities and towns that must insure their property under state law and already face difficulty raising the extra funds through property tax revenues due to a huge drop in property values accompanying the sub-prime mortgage crisis and voter resistance.

Although the state has not suffered major losses during the last three hurricane seasons, the state legislature here set up Citizens Insurance Co. to offer lower-cost rates to beleaguered homeowners - but Citizens, too has come before the insurance commissioner several times asking for a rate hike. The problem is magnified in coastal states like Texas, California, Oregon and Washington, and all along the Eastern Seaboard of the United States. Another Munich Re executive says that "climate change can no longer be halted, it can only be attenuated," and thus the risks and losses of the future are potentially massive.

"The insurance industry is able to adapt but, in the end, each individual has to bear the cost. It is therefore very important and makes economic sense to lay cornerstones for a new agreement, with ambitious targets, in Copenhagen. After all, the climate reacts slowly. Even now, climate change can no longer be halted, it can only be attenuated. And it is high time this was done."

Hoppe says "a binding commitment will have to be defined that limits global warming to 2°C above pre-industrial levels. This can be done only if global carbon emissions are cut to 50 percent of 1990 levels by 2050. That means the industrial countries will have to achieve 80 percent, and that globally there will have to be a real fall in emissions within the next few years." Furthermore, to rapidly find a successor to the Kyoto Protocol, all the principal carbon emitters would have to accept binding reduction targets."

Munich Re has a horse in the race. It founded the Munich Climate Insurance Initiative, which has set out to advise developing nations about future costs associated with the issue, and The company's major proposal, which would cost abot $10 billion per year to implement, suggests prevention, so-called "microinsuranc" programs and the funding of a climate insurance pool for the largest risks.

"Since the developing countries did not cause climate change and are not able to adapt well to its impacts, active cooperation and help with risk reduction and insurance from the industrial countries is only logical. The insurance solution is a key element of adaptation, and important in earning the approval of developing countries for a new agreement

Dr. Koko Warner, an MCII Executive Board member now at the Copenhagen summit, said smaller nations who played no significant role in climate change through their greenhouse emissions nonetheless could face destructive costs and must prepare for them.

"Since the developing countries did not cause climate change and are not able to adapt well to its impacts, active cooperation and help with risk reduction and insurance from the industrial countries is only logical. The insurance solution is a key element of adaptation, and important in earning the approval of developing countries for a new agreement," Warner said.

The MCII recommendations could be incorporated into the final document emerging from Copenhagen, the company said.

With all the costs, there is a great economic opportunity presented by climate change, Munich Re's management board member Jeworrek says. "New technologies are being developed and energy efficiency is increasing. This will bring benefits all round. Using our expertise, we have developed a range of risk-transfer products to help such technologies achieve a breakthrough. A prime example is our cover for manufacturers' performance warranties on photovoltaic modules."

ERGO, Munich Re's primary insurance group, has also developed a large number of innovative climate-change products, making it one of Germany's leading renewable energy insurers for end-consumers and industrial clients, he said.